Devices put insurer in the passenger seat

That's the selling point for palm-size devices, often called “tattletales,” that consumers can voluntarily install into a car's on-board diagnostic port to track driving habits such as mileage, speed, time of day and braking intensity.

“It's a more accurate way to measure auto insurance risks so those customers who are lower risks, pay lower rates,” said Dick Luedke, a spokesman for
State Farm Insurance.

The insurers say the devices give drivers control over their rates and encourage good habits. Others wonder if the measures used by the insurers accurately predict risk.

One former Minnesota regulator is skeptical and worries about how insurers will use the data.

“One policy-holder's discount is another man's surcharge for not using the device,” said former Minnesota Attorney General Mike Hatch, who also is a former state Commerce Department commissioner. He questioned whether speed, G-force and mileage accurately reflect risk.

For example, an inner-city driver would stop more frequently a rural driver, Hatch said, but a rural driver might drive faster than an urban driver.

State Farm offers some form of the device in 18 states and will offer it in 31 states by the end of the month. Luedke emphasized that the device is voluntary. Those who choose to enroll get free use of the device for a year and an immediate 5 percent discount on their insurance rate.

After the free trial, the State Farm device costs $5-$10 a month, depending on the level of service. Drivers can add roadside assistance, location monitoring and alerts, so a parent might be notified if a teen ventures into an area he or she isn't supposed to go.

Progressive Insurance's “Snapshot” device, offered nationwide, is free. Consumers plug in the device themselves and use it for six months to calculate their renewal rate then return the device to Progressive. The insurer also offers the device free to noncustomers for a 30-day trial.

According to Progressive, more than 1 million drivers have signed up since 2008. Drivers save an average of $150 per year, the spokeswoman said.

Progressive's “Snapshot” uses the time of day and the speed to calculate the number of miles a customer drives as well as how often they slam on the brakes.

The device “is great for people who drive less, in safer ways and during safe times of day,” the spokeswoman said.

Allstate Insurance offers a similar device in 10 states. Spokeswoman Meghan O'Kelly said that in addition to mileage, it measures acceleration, braking, speed and time of day, but not location. She said mileage is half of Allstate's risk calculation.

Some 12 percent of new customers have enrolled, she said with discounts averaging 14 percent.

Neither Progressive nor Allstate track location.

Luedke declined to provide data on State Farm customer usage but said users average a 10 percent discount. “It gives the customer some control,” he said. “Maybe you're inspired to drive less knowing the less you drive, the bigger the discount - and it's good for the environment.”

Some drivers were skeptical in interviews.

“I wouldn't do it until I knew more about it,” said Karen Rivard, who works in downtown Minneapolis.

But Tim Holmes of Eagan, Minn., used the Progressive device and liked it. “I just wanted a break on my insurance,” he said, adding that he had a wreck on his record.

He said he still gets a 15 percent discount and his rates finally dropped below $100 a month, but Holmes, 29, wasn't sure whether to attribute the rate to his habits or his increasing age. “I didn't have any fear about my privacy,” he said.

Hatch said he expects insurers to eventually sell the data the way banks sell loan data. Luedke said State Farm doesn't sell any customer data to third parties.

Not everyone provides the option. In a statement,
AAA said the company is researching the costs and benefits of the devices.

The optional trackers have fueled – or settled – domestic debates. The Progressive spokeswoman said she knows of couples who use the devices to determine which spouse is a better driver.

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